Under some conditions, the majority of sediment leaving a watershed can be from streambank sources. Field observations have shown that seepage erosion results in undercutting of streambanks which leads to bank failure. The objective of this study was to determine the soil physical properties and hydrologic conditions governing these processes. Using field observations as a guide, a streambank consisting of a variable topsoil depth over a 10 cm conductive layer, and 5 cm water-restrictive layer were mimicked in laboratory lysimeter experiments. The layer slopes were varied along with the pressure head established on the conductive layer. Experiments were conducted with 30, 50, and 80 cm topsoil bank depths, 0, 5, and 10% slopes, and 30, 60, and 80 cm heads. These data were used to model the subsurface flow-seepage erosion interaction. The increased instability of streambanks due to undercutting resulting from seepage erosion was modeled with the USDA-ARS Streambank Stability Model and compared to laboratory and field observations. The propensity of streambanks to fail during the recession limb of hydrographs was found to be the result of a lag in interflow induced seepage erosion that undercut the streambanks in addition to reducing the apparent cohesion of the bank material.